Peer-to-Peer Business Lending Gives Banks a Run for their Money

It used to be that the only way small businesses could obtain a loan was to visit their local bank. For new operations, that meant pledging the house to get the loan in some cases, and at other times, being turned down flat. The lack of access to easy lending or financial markets often meant that new businesses didn’t get off the ground or the founder needed several years of personal savings to do so.

The advent of peer-to-peer business lending in its various guises is changing all that.

Local or Global Lending

Some peer lending operations are for local markets whereas others take a global approach. Often, licensing as a financial organization is a deciding factor on where a lender can operate. However, the makeup of the peer-to-peer organization also affects how things are structured.

Some supporting platforms offer donor support like US-based GoFundMe, which may not necessarily restrict where the donated funds come from. GoFundMe has moved from personal support to business financing via their platform, which is a change from what they were known for early on. It’s hoped that peer-to-peer lending for companies will continue to extend which businesses can apply for a peer lending business loan and where they’re located.

Peer-to-Peer Lending in Hong Kong

Capital Match is busy providing business loans to SMEs in need of capital. Whether to buy new technology, industrial equipment, or for general working capital requirements, Hong Kong businesses can use the platform to provide capital to other businesses or seek capital for their own operation.

So far, Capital Match has loaned out over 61 million HKD either using straight loan facilities or invoice financing. With the latter, it is a form of factoring to help advance monies ahead of payment for invoices to clients or customers. So far, the maximum loan or invoice financing has been 1.2 million HKD for an individual business operation.

Faster Decisions with Peer-to-Peer?

Lending via an organized platform is often quicker to get a loan approved and funds issued. There’s no need to visit the bank branch directly or wade through a complicated bank site to do so. With a dedicated operation focused squarely on lending, the procedures are already in place to verify the details necessary, credit scores the applicant, and reach a decision quickly about whether to approve the financing or not.

Businesses Open to Lending & Investment Opportunities

Business owners are beginning to see the benefits of side-stepping the traditional bank loan route in favor of peer lending. What was a new concept just a few years’ ago, is now becoming more mainstream. Perhaps the previous shock to the financial markets where bank lending ground to a halt has given some business owners reason to pause and be open to other options to seek funding.

For businesses with spare cash, lending to other businesses through a peer lending platform is an interesting alternative to low-returning money-market funds or buying shares, which often seems too risky. With secure systems and business credit checks, coupled with pleasing returns, lending through a peer lending platform is becoming increasingly considered too.

Traditional banks have now got a fight on their hands to retain business customers. Where they used to make easy money from high business banking fees and lending rates, the alternative options are applying new, unwelcome pressure to stodgy banks.